Comex High Grade Copper Futures (HG) Technical Analysis – January 19, 2017 Forecast

March Comex High Grade Copper futures continued to weaken on uncertainty over the value of the U.S. Dollar and worries about demand from China. Prices are under pressure primarily because investors feel the dollar is going to strengthen over the long-term due to high expectations the Fed will raise rates in 2017. This idea was supported by comments from Fed Chair Janet Yellen late Wednesday.

Traders are also unsure about the timing of President-elect Donald Trump’s plans to rebuild America. Shortly after his election in November, Trump promised to spend $1 trillion on rebuilding the U.S. infrastructure. Since then he has not mentioned how or when he is going to do this, making investors nervous over whether he can live up to his promises in a timely manner. This is helping to fuel liquidation of long positions.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower.

The main range is $2.4480 to $2.7160. Its retracement zone at $2.5820 to $2.5505 is the primary downside target. Since the main trend is up, we could see a technical bounce on the first test of this area.

Forecast

Based on the current price at $2.6070 and the earlier price action, the direction of the copper market today is going to be determined by trader reaction to the uptrending angle at $2.5980.

A sustained move over $2.5980 will indicate the presence of buyers. This could generate enough upside momentum to fuel a rally into the steep downtrending angle at $2.6560.

A sustained move under $2.5980 will signal the presence of sellers. This could drive the market into the 50% level at $2.5820. If this price fails then look for an acceleration into the main Fibonacci level at $2.5505.

We’ve hit a critical point on the copper chart. The near-term direction should be determined by trader reaction to $2.5820.